Startup gets $38.5M to take on Medtronic with a smaller overactive bladder, sacral neuro implant

Axonics Modulation Technologies has gained $38.5 million in a Series B round to start a study of its overactive bladder implant in Europe and North America early next year. It's expecting to go toe-to-toe with medical device giant Medtronic ($MDT), which has long marketed its InterStim sacral neuromodulation (SNM) implant that was the first FDA-approved to treat overactive bladder, nonobstructive urinary retention and chronic fecal incontinence.

The startup said its device is 60% smaller than this approved implant. Axonics expects that its SNM implant will also be the first rechargeable implant in this indication, as well as lasting longer with an anticipated 15-year life span of use in the body. That's three times longer than the anticipated life span of what's already marketed, the Irvine, CA-based startup said.

"Revenue from the sale of SNM devices is estimated to be approaching $600 million annually with nearly 30,000 devices implanted in patients in 2014 alone," noted Axonics CEO Raymond Cohen in a statement. "Revenue for this market is projected to grow to over $1 billion by 2019. With only one player in the SNM market today, this represents a significant opportunity for Axonics stakeholders and patients alike."

Axonics was founded in late 2013 to develop a novel neuromodulation implant based on technology in-licensed from The Alfred E. Mann Foundation. This latest financing brings the total raised by the startup to $59 million.

The Axonics SNM system includes the implant, a four-electrode-tined lead, a dedicated remote control, a wireless charging system and a dedicated touch screen tablet for lead placement and programming. An external pulse generator for patient use prior to implant offers trial stimulation.

New investors Advent Life Sciences and Cormorant Asset Management participated in the Series B alongside an existing syndicate led by Edmond de Rothschild Investment Partners and also consisting of existing investors Geneva-based NeoMed Management, Beijing-based Legend Capital, The Mann Foundation and undisclosed individuals.

"We appreciate that this group of world-class investors recognizes the quality work done by Axonics to create a state-of-the-art rechargeable implantable Sacral Neuromodulation (SNM) System," concluded Axonics' Cohen.

Medtronic reaffirmed its interest in overactive bladder devices when it bought Advanced Uro-Solutions in December 2014 for an undisclosed sum. That startup has an FDA-cleared overactive bladder neurostim system that works via tibial nerve stimulation that's applied via a needle to the ankle.

In fiscal 2015, Medtronic had about $2 billion in neuromodulation net sales, up 4% over the prior year. The company attributed the growth to gastrointestinal and urology devices as well as deep brain and pain neurostimulation.